IP Alerts

On June 9, 2011, the U.S. Supreme Court ruled in favor of i4i in the long-running dispute between i4i and Microsoft. In the landmark decision Microsoft Corp. v. i4i Limited Partnership, the Court reaffirmed that a patent can be proven invalid only under the "clear and convincing" standard, even where the U.S. Patent and Trademark Office (USPTO) had not considered the prior art or other information forming the basis for the validity challenge.

Plaintiff i4i sued Microsoft in the Eastern District of Texas for patent infringement. Microsoft argued that i4i’s patent was invalid under the “on-sale bar” of 35 U.S.C. § 102(b). Microsoft argued that the alleged “on sale” software product constituted prior art that was not considered by the USPTO before issuance of the asserted i4i patent. The jury, having been instructed to consider this evidence under the “clear and convincing” standard, rejected Microsoft’s argument. Ultimately, the jury awarded $200 million in damages to i4i.

Microsoft raised several challenges on appeal to the Federal Circuit. The Federal Circuit affirmed, confirming that it was for the alleged infringer to prove invalidity under 35 U.S.C. § 102(b) by “clear and convincing evidence.” The Supreme Court then granted Microsoft’s petition for certiorari on the issue of burden of proof.

Under 35 U.S.C. § 282, the burden of establishing invalidity of a patent lies with the party asserting invalidity. Section 282 does not specify the burden of proof required for an invalidity challenge. Prior to i4i, the case law held that the “clear and convincing evidence” standard applies. Microsoft sought to change this standard by arguing that a defendant in an infringement action need only prove invalidity by a preponderance of the evidence, a lower standard. In the alternative, Microsoft argued that the lower preponderance standard should apply at least when an invalidity defense relies on evidence that was never considered by the USPTO.

The Supreme Court rejected both of Microsoft’s contentions. Relying heavily on the 1934 decision Radio Corp. of America v. Radio Engineering Labs., the Court held “[In RCA], tracing nearly a century of case law from this Court and others, Justice Cardozo wrote for a unanimous Court that ‘there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.’” Justice Sotomayor further explained that this presumption reflected the “universal understanding that a preponderance standard of proof was ‘too dubious’ a basis to deem a patent invalid.” The Court rejected Microsoft’s alternative argument because none of the Court’s earlier cases ever adopted or recognized the fluctuating standard of proof that Microsoft envisioned.

Despite the “clear and convincing” standard, the Court recognized that new evidence supporting an invalidity defense may carry relatively more weight in an infringement action. The Court noted that, where warranted, a jury may be instructed to consider that it has heard evidence that the USPTO had had no opportunity to evaluate before granting the patent.

The i4i decision is significant for all Fitch Even clients in that it clarifies the law on this important point. Please contact Fitch Even partner Timothy P. Maloney, or any member of the Fitch Even litigation team, with questions concerning this alert.